Immovable property which is let out for more than 300 days in a year is not liable to wealth tax

Q. Under what circumstances does a non-resident Indian (NRI) need to pay wealth tax?

Expert Comment: An NRI who is a non-resident under Indian tax laws (which is based on the number of days a person stays in India during a financial year) is liable to pay wealth tax in India in respect of certain specified assets situated in India. These assets are immovable property including residential, commercial, guest house or a farmhouse within 25km of municipal limits; motor cars; bullion, gold and silver jewellery or any articles; aircraft, yachts, boats; urban land and cash in hand exceeding Rs.50,000. All assets mentioned above, if gifted or transferred by the NRI for inadequate consideration to spouse, daughter-in-law or minor children, are also liable to wealth tax.

One residential house is exempted from wealth tax. Immovable property which is let out for more than 300 days in a year is also not liable to wealth tax. While determining the total wealth, deduction is granted on the debt outstanding in respect of the taxable asset. There is a threshold exemption limit of Rs.30 lakh beyond which there is a wealth tax liability of 1%.

Assets such as shares and securities, fixed deposits and loans, stock-in-trade or other assets that are used commercially do not attract wealth tax.

Q. I have been working with an India-based company in Singapore since 1995. In India, I earn a salary for which I am also paying tax. I am simultaneously getting paid in Singapore by my Indian employer and am paying tax even here. Is the money that I earn in Singapore taxable in India?

Expert Comment: It is assumed that you are a resident of Singapore and an NRI for income-tax purposes. Under the Indian tax laws, for a non-resident, tax is payable in India on income accruing or arising in India, income deemed to accrue or arise in India, income received in India or income deemed to be received in India. Therefore, in respect of your salary received in India, the same would be taxed in India.

The salary paid to you in Singapore by the Indian employer would be taxed in India only if it is for services rendered in India. In case such salary is taxable in India on account of your rendering services in India, the Double Taxation Avoidance Agreement between India and Singapore provides for exemption from tax in India if your stay in India does not exceed 183 days during the previous year and the remuneration is not paid by a resident of India. In your case, since the remuneration is paid by an Indian company, you would not be eligible for this exemption and such salary would be taxed in India if the services have been rendered in India.

If your Singapore salary is taxed in India, you would be eligible to get tax credit in Singapore for tax paid in India.